A state spending board Wednesday extended a disputed benefits administration contract while the case winds through court challenges — further delaying new security features that could protect Marylanders plagued by theft of food and other assistance.

The human services agency is contesting the decision in circuit court and has asked a state board that oversees spending and contracts to extend the current vendor’s contract while it awaits the legal review.

The three-member Board of Public Works — Gov. Wes Moore, Comptroller Brooke Lierman and Treasurer Dereck E. Davis — approved the six-month extension, allowing Conduent to continue administering the state’s food and emergency cash benefits programs while the contract dispute is decided.

Fidelity Information Services appealed the contract award in April, arguing — among other complaints — that Conduent submitted an ineligible bid because it didn’t meet the state’s bidding requirements, and the contract appeals board agreed.

The programs, such as the Supplemental Nutrition Assistance Program, help low-earning households secure federal grants for food and expenses.

The state wants benefits recipients to have more secure electronic benefits cards, a responsibility handed to their ultimate vendor. State law requires Maryland to reimburse a beneficiary’s stolen benefits, and the current cards’ magnetic strips, an outdated technology, make them vulnerable to card-skimming devices.

Roughly $33 million in stolen benefits had been reimbursed to about 50,000 households as of Dec. 13, Department of Human Services Secretary Rafael Lopez said. The federal government will continue to pick up the tab through December, thanks to federal legislation. But Lopez said it wasn’t immediately clear if that reimbursement would continue. Lopez said the state would have to set aside an amount based on what it saw last year.

Lierman raised concerns that the agency’s legal protest could further delay a final contract. Should the state lose in court, she questioned whether the agency would have to start the proposal process all over again.

“I think a bad scenario is all of us being here again six months from now and having to approve another extension,” she said, depending on when the court decides the case.

Lierman said she wanted to ensure the state was moving as quickly as possible to protect Marylanders’ benefits and control state costs.

Lopez became animated in his response to Lierman and at times spoke over her in the Governor’s Reception Room. He defended the actions his agency has taken, along with the support of Moore and the state legislature, to reimburse stolen benefits. He said his team is moving urgently toward a vendor contract and hopes to have a court date in January.

“We have, we are and we will continue to [move urgently],” Lopez said, and he offered to have detailed procurement conversations away from the public forum and the two vendors’ representatives who attended the spending board meeting.

“Integrity for us means that, if we make a mistake and the circuit court says we did, we pick ourselves up, we move on for Marylanders,” Lopez said.

The Office of the Attorney General reviews the legal sufficiency of any procurement DHS submits to the Board of Public Works, according to a department spokesperson.

Appeals board finds agency violated law

In its opinion, the Maryland State Board of Contract Appeals stated the highest bidder, Fidelity, showed a “preponderance of evidence” that a state procurement officer’s actions violated the law and were “biased, arbitrary, capricious, (and) unreasonable” when they chose the incumbent, and lowest bidder, Conduent.

The contract appeals board reviews disputes between state agencies and the private companies and vendors who do business with the state.

In the Aug. 30 opinion, the appeals board said it agreed with Fidelity that Conduent did not adhere to the requirements of the proposal and this “should have rendered Conduent ineligible for the award.” The opinion said the procurement officer introduced bias when they did not present Fidelity as an option to the agency secretary but rather proposed choosing Conduent or not choosing it, even though both bids were technically equal and “susceptible for award.”

Paul Webber, Conduent’s assistant general counsel, told the state spending board his company has carried out its end of the procurement process with “care and in a proper manner.” He praised the agency for its “conscientious” procurement decision.

Conduent’s bid, $11 million less than Fidelity’s, he said, was a “very important factor in the state’s decision.” Conduent deferred questions to the state agency.

Michael Miller, an attorney for Fidelity, asked the board why Human Services is requesting a court review the decision when it has a “lawful option” in front of it.

“The real losers here are going to be the taxpayers and the beneficiaries,” Miller said. “Because you’re still going to have fraud issues; that’s going to cost millions of dollars to the state.”

Fidelity filed its appeal this year and asked the spending board to delay making its decision until after the contract appeals board heard the case. Lopez assured the spending board in July that Conduent’s contract was sound and the state should move ahead.

“We would not bring to you — the constitutional officers of Maryland — an unlawful contract to sign,” Lopez said during the July meeting. “We just wouldn’t do it.”

The spending board approved the five-year, $20 million contract without asking Lopez any questions.

When asked Wednesday about the secretary’s comments made months ago, Lierman responded: “Judges get to decide what is legal, not the DHS secretary.”